By Sean Pyott, MD of thryve
The funny thing about COVID-19 is that we saw it coming. Unlike a black swan, which is an unexpected event only obvious after the fact, little was unexpected about the current epidemic. In the past two decades, there have been several outbreaks involving coronaviruses. Though minor, they signalled what was coming. Some heard the message, including former US President George W Bush and billionaire philanthropist Bill Gates. Most ignored it.
We were warned. But we didn’t have the experience to realise just how crippling a ‘minor’ outbreak would be. I say ‘minor’, because in the popular imagination a bad outbreak would resemble ebola or portrayals we’ve seen in movies. In reality, though, a global pandemic is much more mundane in appearance and very subtle in its destruction.
Not everyone should fall for popular imagination, especially not leaders. We can be thankful that at least some action was taken around past outbreaks, else we’d be in much deeper trouble today. Those actions came from proactive leaders who didn’t shy away from risk. In this light, COVID-19 is an opportunity for leaders such as CEOs and boards to change how they deal with risk.
There is no doubt that leaders understand the importance of dealing with risk. According to a 2018 Deloitte survey on the matter, nearly all the people interviewed said they expect their companies to hit serious threats and disruptions within the next three years. They were no doubt thinking of competitors and market shifts, not economically-crippling pandemics, but a threat is a threat.
Yet the majority of the companies didn’t survey well in terms of risk preparedness, and this came down to several factors, most notably investment in technology that aligns with strategy, engagement from senior management and board members, and alignment of risk and risk officers within an organisation.
Some might argue that the risk of a pandemic didn’t seem obvious, hence the passive attitude. But this general hands-off approach to risk management is also reflected in other areas, such as cyber risk. Nobody can say they haven’t heard of cybercrime, so we can assume most places that lack proactive risk management also have a culture of apathy towards the practice.
This has changed. The pandemic has put risk at the forefront of most executive discussions. It is tough to have a business conversation right now that doesn’t include some elements of risk management. In fact, many leaders are currently struggling with focusing too much on risk and not enough on growing their businesses, because they don’t understand the former sufficiently to balance it with the latter. Yet they don’t have a choice.
The issue is that risk management should be a core capability of the organisation. It’s a message thryve and others have been promoting as strategic risk management or integrated risk management. If a company uses technology that aggregates risk data, if the business breaks down risk silos between different departments a collaborative multi-disciplinary culture, and if the exco and board have access to relevant information in a timely fashion – then risk can be a proactive part of strategy, instead of just a reaction towards expected problems.
Doing this isn’t simple. It takes a cultural shift and a careful balance between mitigation and growth. Fortunately, the technology portion is relatively easy. For example, at thryve we deploy platform-based applications that are easy to customise and scale. These can focus on specific areas and requirements in the company, guided by our understanding of your business, and expand as the company’s culture adjust and sees the benefits of the technology tools.
It’s been possible for a while to become a company where risk management is a core and strategic value. But the arrival of COVID-19 has highlighted the extreme importance of this. Risk can’t stay in the wings. CEOs and boards need to embrace strategic risk management as an essential part of their capabilities to steer their organisations. The companies that took this approach beforehand are navigating the pandemic with better results than those that didn’t.